Wed 07/29/2020 13:42 PM
Relevant Documents:
Revised Proposed Sale Order
Sale Order Exhibits

Judge Harlin Hale today confirmed the $100 million sale of Gold’s Gym to RSG Group USA, a subsidiary of German fitness company RSG. Judge Hale applauded the result - which is expected to lead to full recoveries for unsecured creditors (including interest) - as “absolutely amazing” and unique in his 18 years on the bench. The sale was uncontested.

The debtors entered bankruptcy intending to pursue a plan sponsored by their equity owner TNT but, acquiescing to pressure from the official committee of unsecured creditors, pivoted to market-test the plan with TNT serving as stalking horse bidder at an auction. Ultimately, RSG’s winning bid resulted in $42 million of incremental value beyond the stalking horse bid, according to the debtors’ calculations reviewed during testimony at today’s hearing.

According to Sebastian Schoepe, president of RSG Group USA, the broader RSG Group has “16 brands, across 48 countries, over 3 million members, over 300 fitness clubs, over 5,000 employees and annual sales of approximately £355,000,000, or approximately $415,000,000.” Schoepe spoke briefly at today’s hearing.

Mark Shapiro of Glass Ratner, the debtors’ financial advisor, testified in support of the sale. He noted that GUCs were originally slated to recover about 7.5 cents on the dollar under the original plan but will now be paid in full. It appears based on Shapiro’s description of the auction that RSG and backup bidder Venice Strength Owner were the main auction participants.

Aaron Kaufman and Danielle Rushing of Dykema spoke for the debtors today, with Kaufman handling the sale motion. Kaufman reviewed the history of the cases and conducted an extensive walkthrough of the revised proposed sale order. Kaufman noted that the debtors had used the extra time provided for by adjourning the sale hearing to resolve all informal and formal objections and that the Hart-Scott-Rodino antitrust clearance process is going faster than expected. Kaufman did note, however, that revenue is “still uncertain” due to the ongoing pandemic.

Gianfranco Finizio of Kilpatrick Townsend appeared on behalf of the committee to applaud the “gold standard” result of the cases and said he looked forward to working on plan revisions to account for the sale result. Judge Hale complimented the committee on its work in the cases.

After noting that the sale is the best result he has seen in his career, Judge Hale remarked that selling “a company like this in the midst of a pandemic” is “absolutely amazing.”
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